Forester Company has five products in its inventory. Informationabout the December 31, 2018, inventory follows.
| Product | | Quantity | | Unit
Cost | | Unit
Replacement
Cost | | Unit
Selling
Price |
| A | | 600 | | $ | 12 | | | $ | 14 | | | $ | 18 | |
| B | | 1,000 | | | 17 | | | | 13 | | | | 20 | |
| C | | 600 | | | 5 | | | | 4 | | | | 10 | |
| D | | 600 | | | 9 | | | | 6 | | | | 8 | |
| E | | 600 | | | 16 | | | | 14 | | | | 15 | |
|
The cost to sell for each product consists of a 10 percent salescommission. The normal profit percentage for each product is 25percent of the selling price.
Required:
1. Determine the carrying value of inventory atDecember 31, 2018, assuming the lower of cost or market (LCM) ruleis applied to individual products.
|
| | Product (units) | RC | NRV | NRV-NP | Market | Cost | Inventory Value | | A (600) | | | | | | | | B (1000) | | | | | | | | C (600) | | | | | | | | D (600) | | | | | | | | E (600) | | | | | | | | Total | $0 | $0 | $0 |
|
2a. Determine the carrying value of inventoryat December 31, 2018, assuming the LCM rule is applied to theentire inventory. (Do not round intermediate calculations.)
2b. Record any necessary year-end adjusting entry assuming thatinventory write-downs are common for Forester Company.
Note: Enter debits before credits.
|
| | Event | General Journal | Debit | Credit |
|---|
| 1 | | | | | | | | | | | | | | | | | | | | | | | |
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